The reasons behind high prices of e-books – Part 2

The e-book will cost Amazon $20 but it will sell it for let’s say $7 to boost the sales of its Kindles. Although Amazon is cutting its profits on books, it is actually investing in the sales of its e-reader.

The low prices however, made falsified image on the consumers that e-books are less expensive than the print books. A difference of a couple of dollars to maximum of 5 dollars is understandable but $7 opposed to $25 price tag on the hard copy equivalent is unjustified. And in the end book publishers paid the price.

And then came the iPad, a tablet that not only reshaped the mobile computing but also moulded the book reading culture all over the world. The release of iPad in 2010 changed the book reading habits and promoted the e-book culture.

The increasing sales of the tablets increased the sales of e-books. This ultimately introduced a new model of sales to the book publishers, called the ‘agency model’.

According to this model, publishers set the price of e-books and receive 70 percent. Publishers took that deal and then imposed it on Amazon, as detailed by my colleague Greg Sandoval.

But here’s the irony of the agency model: It wasn’t about making more money in the short term, even though e-book prices went up. Publishers raised prices and made less money per e-book copy sold.

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Posted by Usman Khalid on Apr 16 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.